A local finance company quotes a 12 percent interest rate on one-year loans. So, if you borrow $40,000, the interest for the year will be $4,800. Because you must repay a total of $44,800 in one year,...


A local finance company quotes a 12 percent interest rate on one-year loans. So, if you<br>borrow $40,000, the interest for the year will be $4,800. Because you must repay a total<br>of $44,800 in one year, the finance company requires you to pay $44,800/12, or<br>$3,733.33, per month over the next 12 months.<br>a. What rate would legally have to be quoted?<br>Annual percentage rate<br>21.46%<br>b. What is the effective annual rate?<br>23.70%<br>Effective annual rate<br>

Extracted text: A local finance company quotes a 12 percent interest rate on one-year loans. So, if you borrow $40,000, the interest for the year will be $4,800. Because you must repay a total of $44,800 in one year, the finance company requires you to pay $44,800/12, or $3,733.33, per month over the next 12 months. a. What rate would legally have to be quoted? Annual percentage rate 21.46% b. What is the effective annual rate? 23.70% Effective annual rate

Jun 10, 2022
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